Monthly Mortgage Payment Amount Help!

agfarmer

Hi,

I'm in the process of buying a property worth £238k, and I am putting down 25k deposit and my partner £58k.

She has said that we should amend the monthly payments so that I pay back more, to equal out the difference in contribuiton to the deposit.

I agree that I should give more back, but is this the fairest way of doing it, and if so, how do I calculate the amount each of us should pay?

Thanks for any help in advance

A

MortgageMamma

Some people are not going to like what I say here, but I'm going to say it anyway.

I don't see the point in entering into a joint mortgage agreement under joint and inseverable liability, with an attitude of one partner "I've put more in than you, so you have to pay more each month"

IN my opinion this is not what relationships are about, and if you are committed enough to buy a property together you should be committed enough to share your earnings and outgoings 50/50.

If you partner is really itchy about putting in more money why not both put an equal amount in and use a flexible mortgage to make an overpayment with the balance of her funds to reduce the interest, and then she/he can take the money back whenever, if ever, they want.

I know this is your personal business, and I dont intend this to sound offhand, its just my opinion.

Bil2

Hi agfarmer,

Unfortunately, I don't have a direct answer for your question.

I was recently in a similar position to your partner (ie- I'd put more of a deposit down than my partner). We have now resolved this by setting up a 'declaration of trust' which basically states that I'll get my deposit amount back of our home is ever sold. However, we split the monthly mortgage payments equally (to my detriment, I may add!)

Like me, you may face a tirade of abuse from the forum members for wanting to pay your mortgage unequally because you are in a relationship. Some people are happy to split their finances 50-50, others aren't. Just because your partner wants the benefit of her extra contribution- this doesn't mean that you do not have a loving and trusting realtionship. Ignore any comments that you will receive from posters who will try to criticise/undermine the validity of your relationship because of your unequal financial arrangements.

Bil2

MortgageMamma

As I said, it was not abuse or a direct critisism of the relationship itself, just my opinion that people are far to fussed about sharing money equally these days!

Whatever happened to trust? What will happen next, will one have more baths than the other and have to pay more towards the gas bill? what about the phone bill? do you sort of people monitor all that and pay proportionate amounts?

I personally could not live like that. I would be offended if my partner made such demands of me and I certainly would make no such suggestion to him, whether I was the higher or lower earner. We have a verbal agreement between us that if we ever split all our assets will be split 50/50 regardless of who originally had what at the start of the relationship or circumstance.

Bil2

MortgageMamma-

The extra deposit amount being discussed in this case is around £30,000! 'Little' things in a relationship such as who takes more baths or who spends more on the weekly shopping etc are trivial... £30,000 is not trivial!!!

I don't know how the poster's partner got £58,000, but at the end of the day it belongs to her. Should she wish to share it with her partner, then fine. However, should she wish to claim it as hers- also fine! It's not as if she's hoarding the money away somewhere... she's offered to put the amount into a shared property with her partner... all she's asked is that she benefits from having made a bigger contribution. What on earth is wrong with that? It's her decision- it's not about being selfish or distrustful. It's not a sign that the relationship is in trouble.

If the poster had posted to state that he should be entitled to benefit from her money because he is in a relationship with her, do you honestly think that forum members would support this view??? However, this is what you seem to be suggesting.

Bil2

MortgageMamma

Each to their own, I personally do not agree with it, but if it works for them and thats the way they want things then thats their choice and decision.

To me, all the old fashioned values and romance has gone out of young people starting a life together these days. When I first met my partner it was lovely the way we pooled our money together without a second thought. I actually gave hom around £60k to pay off his debts and didnt give a damn if he could pay me back, the way I saw it was that helping him stabilise things then would creater a firmer launchpad for the future. Some people may think that is foolish, perhaps it is, but from my perspective people go into relationships these days trying to protect their assets rather than share them. There's more to be gained and lost in life than money.

Perhaps I am too trusting and too giving, I don't know, but one thing I do know is when I see buyers dividing their income to such as extent that one has to pay more for the mortgage on a house they jointly own and live in, and will likely jointly sell, it does not bode well for the future!

What will happen if OP loses job and insurance won't pay out? will she make him pay back the mortgage payments he's "missed" as she's paid it all?!

The spirit of this is all wrong.

agfarmer

Dear Both,

Many thanks for both of your comments. In all fairness to my beloved partner, her extra finances have allowed us to actually buy down here in the south east. Because of the source, its likely she's got what is due and I may have it still to come, so we'll probably end up cancelling each other out in the future. Maybe that's the answer, keep things simple for now...

Writing the difference in trust is an interesting idea too.

I do hate when buying a house always having to consider bad circumstances, life, income protection etc, takes the pleasure away from the actual purchase!

lady123_2

MortgageMamma wrote:

Each to their own, I personally do not agree with it, but if it works for them and thats the way they want things then thats their choice and decision.

To me, all the old fashioned values and romance has gone out of young people starting a life together these days. When I first met my partner it was lovely the way we pooled our money together without a second thought. I actually gave hom around £60k to pay off his debts and didnt give a damn if he could pay me back, the way I saw it was that helping him stabilise things then would creater a firmer launchpad for the future. Some people may think that is foolish, perhaps it is, but from my perspective people go into relationships these days trying to protect their assets rather than share them. There's more to be gained and lost in life than money.

Perhaps I am too trusting and too giving, I don't know, but one thing I do know is when I see buyers dividing their income to such as extent that one has to pay more for the mortgage on a house they jointly own and live in, and will likely jointly sell, it does not bode well for the future!

What will happen if OP loses job and insurance won't pay out? will she make him pay back the mortgage payments he's "missed" as she's paid it all?!

The spirit of this is all wrong.

couldn't agree with you more, when me and hubby bought our house he put down£100k more than me, plus he paid all the moving costs,lol

MortgageMamma

lady123 wrote:

couldn't agree with you more, when me and hubby bought our house he put down£100k more than me, plus he paid all the moving costs,lol

Thank god someone see's what I'm saying. two little birds should feather their nest together without counting who brings most sticks!

HelpWhereIcan

agfarmer wrote:

I'm in the process of buying a property worth £238k, and I am putting down 25k deposit and my partner £58k...I agree that I should give more back, but is this the fairest way of doing it, and if so, how do I calculate the amount each of us should pay?

All arguments about the rights or wrongs of what you hope to achieve aside, I would suggest that the easiest and best way to achieve what you want would be to set up a declaration of trust and the ownership of the property as tenants in common as suggested by Bil2.

OK, there may be an argument about who in theory benefits most from having equal payments, but the fact would remain that, in the event of a split, you would both leave with the same share you came into the house with. If you end up being together for ever (and never to part, together for ever we two!!) then it will not matter who owns what, will it?

If you did want to insist on paying a different amount each, I would suggest that you divide the £33000 difference by an agreed number of months and do it either as an overpayment that she can draw out at an agreed point in the future or as a 'gentleman's agreement'.

eg if you have £155,000 on a 25 year mortgage at 5% (915.17pm) and you agree to spread the 33k over the 25 years; 33,000 / 300 months = 110 pm

Option 1 - as an overpayment - total payment is 1025.17. agfarmer pays 567.58 (half plus 110) and OH pays 457.58. After 10 years, you have overpaid by 13,200 which you could agree is hers as are further potential withdrawals. There then is the argument about how much interest your overpayments may save (24500 and 4 years on the mortgage) so the arguments could go on and on.

Option 2 - 'gentleman's agreement' - 915.17 - 110 = 805.17 / 2 = 402.58. Therefore agfarmer pays 512.58 and OH pays 402.58. Probably the more simple way to do it.

Just look at the above as rough indicators - there is no real formula I am aware of for doing this. But remember, the only way that your OH can protect the value of her investment and share in the property is by getting your solicitor to draw up a deed of trust and/or set up the ownership of the property as joint tenants.

Hope this helps

jamesd

agfarmer, one approach is to consider that you need to borrow half of the extra amount from her to make your deposits equal. You then pay interest on that amount at the lowest of these two possibilities:

1. the after-tax interest rate she gets on savings today.

2. or the mortgage interest rate.

Once paid off this would leave her in no worse a position than she would be in by using a savings account. You can set the term and repayment amount using a mortgage calculator.

Using the Badford and Bingley 4.85% savings account as the gross interest rate, net for a basic rate tax payer is 3.88%, approximate to 3.9%. For a 5 year term the monthly repayment would be 303.13. For 10 years 166.27. If she is a higher rate tax payer the net interest rate falls to 2.9% and the 5 and 10 year repayments to 295.75 and 158.56.

If the property is sold before it is all paid the remaining balance would be deducted from your part of the split and paid to her. Or you could just continue to make payments if you buy a new place together.